IL, MI, NJ Face Difficult Decisions in Upcoming Budget Negotiations

Governors around the country continue to lay out priorities for the next legislative session. In the coming weeks, SSTI will review gubernatorial addresses and budget proposals related to economic development. This week, we highlight developments in Illinois, Michigan and New Jersey.

Illinois

Illinois is now in its eighth month without an annual budget bill for the current fiscal year, but Gov. Bruce Rauner presented his spending plan for fiscal year 2017 last week. The state faces a $6.6 billion deficit, which the governor said would have to be bridged with drastic spending reductions, or a mix of tax increases and program reductions along with the governor’s larger legislative agenda.

About $1.5 billion is proposed for the Department of Commerce and Economic Opportunity in FY 2017. This would include about $4.8 million for Regional Economic Development, $5.3 million for the Emerging Technology Program and $1.7 million for job training for economic development. No funding is provided for the Invest Illinois Venture Fund, which was also true in FY16.

Michigan

Gov. Rick Snyder recently unveiled a $54.9 billion budget request for FY 2017, including major investments to respond to the Flint water crisis and financial problems for the state-managed Detroit Public Schools system. Gov. Snyder has proposed tapping into tobacco settlement funds to invest in Detroit schools, with funding that has previously supported economic development efforts. His 10-year plan would provide $200 million for space consolidation, instructional support and academic programs, according to the Detroit Free Press. Legislators have already voiced concerns about repurposing the tobacco funds.

The governor is proposing $1.14 billion total funds in FY17 for the state’s Department of Talent and Economic Development, with a recommendation of $1.11 billion for FY18. Within the FY17 funding, about 42 percent would support workforce development, while 10.1 percent would support business attraction and community revitalization.

The state university system would receive $1.6 billion, with $61.9 million reserved for the Michigan State University AgBioResearch and Extension program.

New Jersey

Gov. Chris Christie rolled out a $34.8 billion budget proposal for FY17 last week. The governor anticipates revenues to increase, funding a $550 million bump in K-12 education support. Under the proposed budget, the Department of Labor and Workforce Development would be funded at $167.3 million, and about $2.2 billion for higher education. Appropriation levels for the Economic Development Authority are unavailable, but the organization would receive authorization for $96.7 million in spending.